Libya Uprising and Uganda Banking

TROPICAL Bank has a strong financial stand and will not be affected by the crisis in the parent country Libya, the Central Bank has assured clients and the general public.

The fate of the bank, which is a joint venture between the Libyan Foreign Bank (99.7%) and Uganda (0.3%), was uncertain following the political crisis in Libya.

“Tropical Bank is very well capitalised. Its total capital is well above the minimum regulatory requirement,” said a statement signed by Emmanuel Tumusiime-Mutebile, the Central Bank governor.

Mutebile explained that sanctions imposed on Libya by the United Nations would not affect the operations of the bank.

“The Central Bank would like to advise all financial institutions in Uganda and the general public that the current situation in Libya does not in any way affect the financial sector in Uganda,” Mutebile said.

The bank is part of Libyan interests in Uganda in the housing, telecommunications and banking sectors.

The UN Security Council slapped an arms embargo on Libya on Monday and froze assets owned by Libyan president Muammar Gaddafi and other leaders in the country.

The United States of America followed suit, announcing that it had frozen $30b of Tripoli’s assets, while the European Union announced travel bans and asset freezes for some 26 diplomats.

The bank, established in 1973, posted a sh2.98b total comprehensive income in 2009.

The bank balance sheet for the same period also indicated a sh11.8b worth of cash and balances with the Bank of Uganda.

Meanwhile, Libya has been hit by soaring food prices.

Snaking queues outside bakeries and soaring rice and flour prices have fuelled public anger in the Libyan capital as protests against Gaddafi spread around the country.

The turmoil, which started in the east about 10 days ago and has now spread to other parts of Libya, has disrupted supplies in the desert, oil-producing nation which depends on imports to cover domestic food demand.

In Tripoli’s working class Fashloom neighbourhood locals said flour, vegetables and fuel prices had risen by at least 20% in the last 10 days.

People formed long lines outside bakeries, limited to selling between five and 20 loaves of bread per customer, depending on the area. One man in Fashloom said an average extended household in Tripoli consumed about 40 loaves a day.

“There isn’t enough food,” said Basim, 25, a bank employee.

Basim added that many workers in the public sector had yet to receive February salaries.

“It’s the end of the month, my money is running out. I don’t know what I will do.”

Crowds of people also massed outside state banks, which have started distributing handouts of about $400 per family in an effort by Gaddafi’s government to drum up support.

Inside one bank, there were frantic scenes as chain-smoking employees worked through people’s papers and counted out wads of cash. One man in the crowd shouted angrily and rattled metal gates outside the bank teller’s window.